Oil tankers are seen at the Khor Fakkan Container Terminal, the region’s only natural deep-water port and one of the main container ports in the emirate of Sharjah, along the Strait of Hormuz, a waterway through which a fifth of the world’s oil production passes on June 23, 2025.
Giuseppe Cacacé | AFP | Getty Images
Oil markets are bracing for a possible supply shock after US strikes on Iran this weekend reignited fears that the flow through the Strait of Hormuz could be disrupted.
While analysts expect an immediate reaction to oil prices when trading resumes in New York on Sunday evening, the bigger question is whether tensions could escalate into a lasting disruption to Gulf exports.
“At this point, it appears we are facing a full-scale military conflict between the United States and Iran, which would be unprecedented and whose trajectory would be impossible to assess,” said Vandana Hari, CEO of energy research firm Vanda Insights.
“If this continues for days and Iran and its proxies retaliate to the fullest extent, we are looking at worst-case scenarios for oil, including a major disruption of oil flows across the Middle East,” Hari told CNBC. This is unless the United States is able to pre-emptively disarm the Iranian navy and army, as well as ensure that tanker traffic through the Strait of Hormuz continues to proceed normally.
With tensions escalating, attention has shifted to the Strait of Hormuz, where any disruption would have immediate and outsized consequences for global oil and LNG flows.
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Oil prices year-on-year
Located between Oman and Iran, the strait serves as a critical transit route – and potential choke point – for global crude, with an estimated 13 million barrels per day passing through it in 2025, or about 31% of all maritime oil flows, according to Kpler data.
It connects major Gulf producers, including Saudi Arabia, Iran, Iraq and the United Arab Emirates, to the Gulf of Oman and the Arabian Sea.
Reuters reported on Saturday that an official with the European Union naval mission, Aspides, said commercial ships had received VHF radio messages from Iran’s Revolutionary Guards warning that “no ships are allowed to pass the Strait of Hormuz.”
The official reportedly said Tehran had not formally confirmed any directives to close the waterway.
Early indications point to a larger-scale attack on Iran, with counterattacks likely to intensify and attract several Gulf countries.
Reuters noted that Iran had repeatedly threatened over the years to block the narrow crossing in response to attacks on the Islamic Republic.
In the past, Iran has repeatedly threatened to block the narrow crossing in response to attacks on the Islamic Republic.
Bob McNally, chairman of Rapidan Energy Group, who had been telling clients for weeks that the likelihood of conflict was 75 percent, called it a “very serious development” for global oil and gas markets given their reliance on production and flows from Hormuz.
The big question is how long, industry veterans stressed. The magnitude of any spike in oil and LNG prices will depend on the duration and scale of any disruption to Gulf production and flows, McNally said.
Worst case scenario? : three-digit oilAnalysts say potential scenarios range from limited disruptions to Iranian exports to a complete blockade of Hormuz.
The nightmare for global markets lies not only in the loss of Iranian barrels, but also in a broader disruption of shipping through the strait.
“Early indications point to a larger-scale attack on Iran, with counterattacks that could intensify and draw in several Gulf countries,” said Saul Kavonic, head of energy research at MST Marquee.
Kavonic said markets will initially price in a range of risks – from the loss of up to 2 million barrels per day of Iranian exports to attacks on regional infrastructure or, at the extreme, disruption of passage through Hormuz.
“If the Iranian regime believes it faces an existential threat, attempts to blockade the Strait of Hormuz cannot be ruled out,” he said, while adding that the United States and its allies would likely deploy military escorts to protect shipping lanes.
An infographic titled “Strait of Hormuz” produced in Ankara, Türkiye, June 17, 2025.
Anadolu | Anadolu | Getty Images
If Iran succeeds in closing the strait, the consequences for global oil markets could be serious.
“This could present a scenario three times more severe than the Arab oil embargo and the Iranian revolution in the 1970s, and send oil prices soaring into the triple digits, while LNG prices repeat record highs in 2022,” Kavonic noted.
Brent crude settled at $72.48 on Friday, bringing its year-to-date gain to about 19%. WE West Texas Intermediate (WTI) closed at $62.02, up about 16% so far this year.
Andy Lipow, president of Lipow Oil Associates, said the attacks would significantly increase the risk of disrupting oil supplies to the region, even though Iranian oil facilities have not been directly targeted so far.
Lipow described the worst-case scenario as “an attack on Saudi oil infrastructure followed by a complete closure of the Strait of Hormuz.” He estimates the likelihood of this scenario at around 33%, given that Iran could feel cornered.
